Kenyan firms on Monday, 6 January, expressed a lack of confidence in economic growth for 2025, despite prevailing circumstances indicating projected growth for this year.
This is according to the latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI) December report, which indicated marginal improvement in Kenya’s private sector despite heightened inflationary pressures towards the end of 2024.
The firms predicted low output growth in 2025 in a survey where it emerged that confidence in economic growth was at its second lowest in the survey’s history.
“Optimism for higher activity in the next 12 months dropped to its second-lowest in the series history,” the report revealed.
A photo of a man at a manufacturing company
Photo
Alliance Employment Services
Of the surveyed firms, a small section voiced optimism about increased growth but attributed the potential growth to internal business measures rather than macroeconomic strategies.
“Only 5% of surveyed firms expect output to rise, with these companies basing their optimism on planned business expansion and new products and services,” the report indicated.
This outlook affected employment opportunities. With the relatively weak projections, only the agriculture sector registered a rise in staffing in December. Overall, total employment growth was merely fractional.
Despite the reservations conveyed by the Kenyan firms, the report still disclosed that the private sector was still going strong despite a slight decrease in the PMI index.
The headline PMI stood at 50.6 in December, indicating another marginal improvement in the health of the Kenyan private sector. The index dropped slightly from 50.9 in November, but was above the 50.0 neutral mark for the third month running.
The positive PMI reading was driven by three of its sub-components, as output, new orders and employment all expanded for the third straight month. Notably, this marked the first full quarter of private sector output growth since the final quarter of 2021.
Even so, a build-up of price inflation at the end of 2024, as a sharp increase in input costs led private sector firms to raise selling prices at the quickest rate since December 2023.
The latest PMI report indicated a need for leveraging on the relative stability seen in 2024 in this new year and maintaining economic growth to allay the low confidence expressed by Kenyan firms.
President William Ruto speaking during a townhall meeting on loans and job creation at the Kenyatta International Convention Centre (KICC), Monday, December 9, 2024.
Photo
PCS